Stimulus Package May Include Tax Breaks

Washington, DC, Jan. 5, 2009--The new economic stimulus package being proposed by President-elect Barack Obama will reportedly include hundreds of billions of dollars worth of tax breaks for individuals and businesses.

The incoming administration is asking that tax cuts make up 40 percent of a stimulus package. The measure may be worth as much as $775 billion, so tax cuts may constitute more than $300 billion of the legislation.

Making tax cuts such a large part of the stimulus may help win support from congressional Republicans.

“Republicans, by and large, think tax relief is a great way to get money to people immediately,” McConnell said yesterday on ABC’s “This Week.”

The plan would attempt to boost consumer demand by spending $140 billion on tax breaks worth $500 for individuals and $1,000 for couples, according to reports. The change would come by altering tax-withholding rules, rather than through a rebate check as with the previous stimulus plan enacted last year.

For businesses, Congress is also likely to include incentives such as accelerated depreciation to encourage companies to buy equipment now rather than defer such investments. The plan also attempts to combat joblessness by offering companies tax breaks for hiring more workers, the aide said.

Many of the business tax incentives would be accelerated so that any dollar written off now would not be able to be claimed in future years, the aide said. That would reduce the long-term impact of the tax cuts on the federal budget deficit.